The sugar industry in the state is eager to tap export of molasses in view of the bumper cane harvest and an estimated sugar output of over 3 crore metric ton in the next crushing season.
Exports are set to generate additional revenue and provide additional stability to the sector amid demand-supply volatility.
The controlled price of molasses is about Rs 120 per quintal, which is 50 per cent higher as compared to Rs 80 per quintal last year and it is set to be a major benefactor for the industry.
In the current sugar season, molasses production in the state stood at more than 50 lakh metric ton and in the current season, nearly 3 lakh MT molasses has been exported from UP, Punjab, Karnataka and Haryana.
An official of UP-based sugar mill and ethanol producer said that free movement of molasses would directly translate into more cash flow for mills.
“Since molasses is demand-supply sensitive, its free movement makes commercial sense in the present context, especially when we are staring at another excess season of sugar output due to higher yield estimates,” he said.
Molasses is a cane by-product generated during sugar production and its recovery is pegged at 4.75 per cent of cane crushed. It is used to make ethyl and methyl alcohol. While methyl alcohol is unfit for human consumption, ethyl alcohol is used for making liquor and medicines. Molasses is also used to make ethanol, which is mixed with fuel under the Central policy.
Molasses is in high demand in several countries like South Korea, Vietnam, Europe and West Asia for different industrial applications like cattle feed and inflammable products. Since molasses is a state subject, respective governments enjoy jurisdiction on its inter-state and international movement.
In the wake of expected glut in molasses next year, Indian Sugar Mills Association (ISMA) had recently urged the Centre to facilitate export of C-heavy molasses in 2020-21 sugar season or till surplus cane was produced. Exports could be made without any financial burden on the government and allow the use of more B-molasses and cane juice for ethanol, instead of for sugar production, it suggested.
The ISMA also asked for further easing of rules regulating supply and transport of ethanol between states, apart from facilitating time-bound bank credit for projects being set up by sugar mills for optimum utilisation of cane value chain, comprising molasses and ethanol.
Meanwhile, ISMA said ethanol supply contracts for 1,700 million litres had been entered into between ethanol manufacturers/mills and oil-marketing companies (OMCs) for the current ethanol supply year 2019-20 (December-November).